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Parental benefits improve parental well-being: evidence from a 2007 policy change in Germany

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  • Mikko Myrskylä

    (Max Planck Institute for Demographic Research, Rostock, Germany)

  • Rachel Margolis
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    Abstract

    Family policies aim to influence fertility and labor force participation, and support families. However, often only fertility and labor supply are considered in policy evaluations. For example, the 2007 extension of parental leave benefits in Germany is generally considered unsuccessful because changes in fertility and labor force participation were modest. However, parental wellbeing is also important, in itself and as a determinant of child well-being. This paper is the first to consider the effect of parental leave policies on parental well-being. We analyze the German 2007 parental benefits reform and find that the extension of benefits strongly increased parental well-being around the birth of a child. The effect is observed for first and second births and for various sub-populations. A placebo test using data from Britain where there was no policy change supports the causal interpretation. Our results cast the success of the German 2007 policy change in new light. Parental leave benefits have an important direct impact on parental wellbeing.

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    File URL: http://www.demogr.mpg.de/papers/working/wp-2013-010.pdf
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    Bibliographic Info

    Paper provided by Max Planck Institute for Demographic Research, Rostock, Germany in its series MPIDR Working Papers with number WP-2013-010.

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    Length: 38 pages
    Date of creation: Aug 2013
    Date of revision:
    Handle: RePEc:dem:wpaper:wp-2013-010

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    Web page: http://www.demogr.mpg.de/

    Related research

    Keywords: Germany; parenthood;

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    1. repec:hal:cesptp:hal-00657603 is not listed on IDEAS
    2. Kluve, Jochen & Tamm, Marcus, 2009. "Now Daddy's Changing Diapers and Mommy's Making Her Career: Evaluating a Generous Parental Leave Regulation Using a Natural Experiment," IZA Discussion Papers 4500, Institute for the Study of Labor (IZA).
    3. Bergemann, Annette & Riphahn, Regina T., 2009. "Female labor supply and parental leave benefits – the causal effect of paying higher transfers for a shorter period of time," Working Paper Series 2009:5, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Andrew Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2003. "Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis," DELTA Working Papers 2003-14, DELTA (Ecole normale supérieure).
    5. Angela Luci & Olivier Thévenon, 2012. "The impact of family policy packages on fertility trends in developed countries," Working Papers 174, Institut National d'Études Démographiques (INED).
    6. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
    7. Marcus Tamm, 2009. "The Impact of a Large Parental Leave Benefit Reform on the Timing of Birth around the Day of Implementation," Ruhr Economic Papers 0098, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Robert Drago & Katina Sawyer & Karina Sheffler & Diana Warren & Mark Wooden, 2009. "Did Australia's Baby Bonus Increase the Fertility Rate?," Melbourne Institute Working Paper Series wp2009n01, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
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